XRP Drops Below 200-Day Average Amid Inflation Uncertainty

XRP has slipped beneath its crucial 200-day moving average, reflecting declining trader sentiment and mounting market tension ahead of crucial U.S. inflation data. The payments-driven cryptocurrency has been under renewed pressure, shedding over 4.5% within 24 hours, according to TradingView.

On May 30, XRP experienced a notable price decline, crossing below the $2.20 mark and falling below its long-held 200-day simple moving average (SMA) — a key technical indicator that many traders use to assess long-term trend direction. This breach, the first of its kind since April 10, signals intensified bearish sentiment and a growing downward momentum across digital assets.

The renewed drop in XRP comes in the wake of increasing institutional interest, particularly around its use as a Treasury reserve asset by corporations. This contradicting narrative — institutional optimism versus technical weakness — has left traders cautious as broader market conditions grow more volatile.

Simultaneously, Bitcoin (BTC), the leading cryptocurrency by market capitalization, also saw a decline. Prices briefly dipped below $105,000 during early European trading hours on Friday. This move followed a sharp 3% drop in the previous 24 hours, highlighting the market’s increasingly risk-off stance.

Driving Bitcoin’s weakness, according to blockchain analytics platform SoSoValue, was a net outflow of $358 million on Thursday from 11 U.S.-based spot bitcoin ETFs. This marked the first negative outflow since May 13 and the most significant single-day withdrawal since March 11. Analysts noted that rising investor uncertainty due to mounting fears of a renewed trade war may also have contributed to pressure on digital assets.

Major altcoins mirrored the downturn. Ethereum (ETH), Solana (SOL), and Dogecoin (DOGE) all posted notable losses. Meanwhile, smaller market cap cryptocurrencies such as Optimism (OP), Arbitrum (ARB), Bonk (BONK), and PepeCoin (PEPE) dropped more than 10%, based on data from Coingecko.

Traders Await Fed’s Preferred Inflation Gauge

Much of the current market hesitance is tied to Friday’s release of the U.S. Core Personal Consumption Expenditures (PCE) index — the Federal Reserve’s preferred measure of inflation. April data shows that general consumer prices increased by 0.15% month-over-month, pushing the yearly inflation rate marginally down from 2.3% to 2.2%, per FactSet economists.

More importantly, the core PCE index, which eliminates volatile components such as food and energy, is forecasted to have risen 0.12% month-over-month and 2.5% annually. If Friday’s reading confirms these lower inflation rates, it could prompt speculation on Federal Reserve interest rate cuts in the near term. This could potentially offer relief for risk assets like XRP and Bitcoin.

“All eyes now turn to the Core PCE data due today, which could reignite bullish sentiment if inflation shows signs of easing,” noted Valentin Fournier, Lead Research Analyst at BRN, in a market commentary email. A softer inflation print may revitalize bullish momentum and offer strategic entry points for investors eyeing discounted crypto valuations.

Related: Expert Advice: Sell XRP If You’re Confused

For now, the dip in key digital assets, particularly XRP’s fall beneath a significant technical threshold, underscores a market gripped by uncertainty. As traders navigate inflation reports and central bank signals, the near-term trajectory of XRP and other cryptocurrencies hinges on whether macroeconomic conditions lean towards monetary easing or continued restraint.